Your phone bill fees subsidized service for dead people

The Lifeline program that subsidizes phone and Internet service for low-income people is susceptible to risk of fraud, waste and abuse, according to a recent government audit.

The Lifeline program that subsidizes phone and Internet service for low-income people is susceptible to risk of fraud, waste and abuse, according to a recent government audit. (Oleg Kalina / Getty Images/iStockphoto)

If you’re annoyed at the fees on your phone bill and wonder where all of that money is going, you won’t like this answer.

One of those fees subsidizes service for the less fortunate and that program included participants who had been declared dead and others who may not have been eligible, according to a recent audit.

The Government Accountability Office reviewed the Lifeline program that provides discounted landline, wireless and internet services to people who meet income criteria or are presumed to be in need because they participate in other government assistance programs such as Medicaid, food stamps, public housing, Supplemental Security Income and veterans pensions.

The program is paid for from the Universal Service Fund, which collects money from phone companies through assessments on their interstate and international revenues. The companies typically recoup those payments from their customers through universal service fees, which aren’t enormous but still are money out of customers’ pockets. I paid 44 cents last month in universal service fees for my landline phone and $1.15 for my wireless plan.

Lifeline participants enroll through their telecommunications companies by providing proof of eligibility, which the companies are supposed to verify. The GAO wanted to see for itself whether participants were eligible, and what it found raised a lot of questions.

It compared Lifeline data with Social Security death records and found nearly 6,400 participants had been reported dead. It also found about 5,500 potential duplicate subscribers. Together, those recipients received about $1.3 million in benefits a year, according to the audit, which was released in late June but was based on an analysis of data from 2014.

That’s disturbing enough, but mere pennies compared to the potential amount of subsidies that may be going to those who claim they are eligible because they participate in government assistance programs that they may not really be enrolled in.

About 12.3 million households participate in the program. The GAO said it tried to verify the eligibility of about 3.4 million of the participants by matching them against data from qualifying government programs. It said it was unable to confirm the eligibility of about 1.2 million of them. If all of those participants are in fact ineligible, the audit said, that would be a waste of $137 million a year.

In Pennsylvania, where nearly 500,000 people use Lifeline, the agency sought to verify the eligibility of 29,659 subscribers who claimed they qualified because they received Supplemental Security Income. It was able to verify eligibility for less than half of them, 12,596.

Auditors also tested the verification processes of telecommunications companies by going undercover and trying to apply for service using fictitious eligibility documentation. They were successful in 12 of 19 attempts, according to the audit.

The results of the review did not surprise some officials at the Federal Communications Commission, which oversees Lifeline. A previous audit in 2010 raised similar concerns, and the FCC’s own study last year revealed problems.

FCC Chairman Ajit Pai said in a statement that the GAO report confirms that “waste, fraud and abuse are all too prevalent in the program.” He said the commission is working to improve it.

The GAO audit said the fragmented oversight of the program puts it at risk.

The FCC uses a not-for-profit organization, the Universal Service Administrative Co., to administer it. More than 2,000 telecommunications companies participate in Lifeline and offer discounted service to their customers, and those companies generally are responsible for verifying that customers are eligible, according to the audit.

The audit said the FCC and Universal Service Administrative Co. have taken steps to improve controls over finances and subscriber enrollment, including creating a national eligibility verification process that would relieve telecommunications companies of that responsibility. That system is scheduled to be tested in at least five states by the end of this year and be available nationwide by the end of 2019.

A universal database has been created to screen for subscribers trying to receive duplicate Lifeline benefits — they are allowed to receive only one discounted service at a time — and trying to enroll using fictitious identities and addresses. That already has resulted in about 1.7 million subscribers being removed from the program, according to the audit.

Associations representing wireless and landline telecommunications companies said they support the goals of Lifeline and support efforts to stop any waste or fraud in the program.

FCC Commissioner Mignon Clyburn cautioned that the audit shouldn’t be used to justify cuts to Lifeline because “that would be catastrophic for those most in need.”

“The answer is not denying access to those who cannot afford connectivity and access to critical services like 911,” Clyburn said. “The next steps should include rolling up our sleeves and addressing any imperfections that remain.”

It’s important to address those issues immediately, the GAO noted, because the FCC expects Lifeline enrollment to increase following a decision last year to also make Internet services eligible for the discount, which is $9.25 per month.

“This expansion could carry with it increased risks for fraud, waste and abuse,” the audit said.

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